In terms of what October 6, 2012 means to the pension plan, under ERISA you cannot change the Plan and then retroactively change the rules. Changes to Pension Plans must conform to certain rules established under the law. To illustrate how that works, we can look to how both Qwest and CenturyLink ended their Plans for all non-represented employees.

In November 2009, Qwest amended the Pension Plan freezing those non-represented employees where they currently were in the plan. While they could freeze those employees, those employees retained what they had up to that point. Additionally, non-represented employees hired after January 1, 2009 are not eligible to participate.

CenturyLink followed suit freezing their current non-represented employees and disallowing future non-represented new-hires from participation the following year.

Again, you cannot change a Plan and then retroactively change the rules. This is one of the major protections of the Employee Retirement Income Security Act (ERISA).

Legally, while the door could be closed going forward, what is earned to date can’t be changed to take it away.

Changes to Non-represented Plans

Employers can end a pension plan through a process called plan termination. There are two ways an employer can terminate its pension plan:

The employer can end the plan in a standard termination but only after showing the Pension Benefit Guaranty Corporation (PBGC) that the plan has enough money to pay all benefits owed to participants.

If a plan is in a termination process and is not fully funded, the employer may apply for a distress termination if the employer is in financial distress. To do so, the employer must prove to a bankruptcy court or to the PBGC that the employer cannot remain in business unless the plan is terminated.

Could the Company unilaterally buy out all pensions and end any pension coverage?

If they didn’t have to bargain with us and decided to just dump their pension Plan, they could if they followed the process required under law. They would first have to show the PBGC that the plan has enough money to pay all The Pension benefits owed to participants. The Plan would then be required to either (a) purchase an annuity from an insurance company which would provide the participants with lifetime benefits when they retire; or, (b) if the Plan allows lump sum payments, to issue one lump sum payment to each of the participants that covers their entire benefit.

Before purchasing an annuity, the plan administrator must give participants advance notice that identifies the insurance company (or companies) that the employer may select to provide the annuity. The PBGCs guarantee ends when the plan either purchases annuities for or gives participants lump sum payments.

Is the Qwest Pension Plan safe?

On page 105 of Qwest’s current annual 10-K Report, it is reported that:

“The accounting unfunded status of our pension plan was $585 million at December 31, 2010. During 2012 we expect to begin making required contributions to the plan and we estimate that these 2012 contributions could be between $300 million and $350 million.”

The Qwest Plan was underfunded by $790 million as of December 31, Continuing on page 110 of this Report, the “Fair value of [pension] plan assets at end of year” 2010 was $7.66 billion. And, on page 120, Qwest reports the total pension plan “benefit obligation” at end of year 2010 was $8.245 billion. Current Plan assets are at 93% of liabilities.

By law they are required to make contributions to bring it to 100% but also gives them time in which to make those contributions.

Who is covered by the Qwest Pension Plan?

* Employees with one or more years of service

* Participation is automatic don’t have to enroll

* Occupational employees hired or rehired before 12/31/08 are vested after 5 years (traditional Pension Plan) Occupational employees hired or rehired after 12/31/08 are vested after 3 years (Cash Balance Formula)

* Eligible to take benefit at termination (if vested), do not have to wait until age 65

* Pension benefit is provided at no cost to employee

* Employees do not make contributions they are not allowed

* Qwest pays for entire cost and bears the investment risk

The Plan must meet certain criteria established by the IRS and the Department of Labor (DoL). This criteria requires that the funds be set aside in a Trust. At
Qwest, there is $8.245 Billion owed with current assets of $7.66 billion. Assets can only be used for the benefit of plan participants.

Sales Consultants Pension Factor using average monthly compensation* X PCS resulting in a monthly age 65 benefit Average monthly compensation is based on highest 60 consecutive months of eligible earnings out of last 120 consecutive months of eligible earnings

Mortality will be based on the RP 2000 table adjusted for increased longevity

New interest rates will be phased in over 5 years starting in 2008

Payment Options

Single Life Annuity – Monthly benefit paid to you for rest of life

50% and 100% Joint and Survivor Annuity – Reduced benefit paid to you for life with either 50% or 100% continuing to spouse

Life Annuity with Ten Years Certain – Monthly benefit paid to you for rest of life with 120 months of payments guaranteed

Lump Sum – Total value of benefit paid

Combination Payment Option – Lump sum and monthly annuity

Survivor Options

50% and 100% Joint and Survivor Annuity Reduced benefit paid to you for life with either 50% or 100% continuing to spouse

Pension Survivor Benefit – Effective January 1, 2009 the Qwest Pension Plan was changed to pay a pre-retirement benefit in all cases when a vested employee dies prior to receiving the pension benefit. The benefit will be paid to a surviving spouse, a named beneficiary or trust or the employees estate.

All employees (married and single) have the opportunity to request and complete a beneficiary designation form at any time prior to benefit commencement that will allow the employee to name any person, trust or the employees estate as the beneficiary for the pension plan benefit if they die as an active employee or before they start receiving their pension benefit. The beneficiary designation will follow requirements of Federal law regarding the required Joint and Survivor benefit and spousal consent rules.

The provisions in the Plan pertaining to Spousal benefits are unchanged. The Plan would provide a benefit to a non-spouse beneficiary, trust or estate based on a 50% Joint and Survivor annuity calculated as if the participant had started receiving the benefit the day before his/her death.

The benefit can be paid as a lump sum if elected within the required time frame.

The surviving spouse will receive the greater of:

(a) the amount the surviving spouse would have received if the Participant had commenced receiving benefits under a 50% qualified joint and survivor annuity on the day before his/her death; or

(b) an amount equal to 45% of the benefit that would have been paid had the participant terminated employment, survived until age 65 and started to receive payments at age 65.

When can I receive my pension?

Upon termination (if vested) – do not have to wait until age 65

Lump sum option available only if election made within 180 days after termination

Election for annuity must be made within 180 days or no retroactive payments will be made

Spousal consent required for election of option other than a 50% or 100% Joint and Survivor annuity.

If participant requests a pension kit at least 30 days in advance of termination date, retirement date is the day following term.

If participant request pension kit less than 30 days in advance of termination date, the pension effective date is 30 days after termination.

Termination must be posted in HR data base by 5th of month, and

Pension forms must be received by 5th of month to paid on the 1st of the following month

Lump sum is taxable as ordinary income

Lump sum payments are subject to an additional 10% excise tax if under age 55 at termination

If rolled over to IRA, not taxed until withdrawn

Annuity payments are taxed as ordinary income you make election on withholding

Since the merger of CenturyLink and Qwest, we’re receiving a number of calls from members who are concerned as to what will happen to their current pension entitlements. Some believe that they should retire now, not because they want to but out of concern that they will be caught up in a change.

Comparisons between the Qwest Pension Plan and the CenturyLink Plans add to this with a number of our people wondering if CenturyLink will change the current Qwest Plan to the terms of one of the CenturyLink Plans.

Examples:

• Can established pension payouts for vested employees be cut at the bargaining table?

• Can the current defined pension plan be eliminated for vested employees?

• Could the Company unilaterally buy out all pensions and end any pension coverage?

• If so, are there laws governing this?

In this merger, CenturyLink is bound by the provisions of Section 1.3 (“Successorship”) of our contract. As such, CenturyLink “. . . shall be bound by the Terms and conditions of this Collective Bargaining Agreement between Qwest Corporation, Qwest Business Resources, Inc. and CWA, and shall assume all other duties and responsibilities of a successor (as that term is construed under the National Labor Relations Act).”

Any change to any of the negotiated benefit plans is subject to the provisions of Addendum 10. Section A.10.4 states that the employer can propose changes “provided, however, that no change shall be made without the consent of the Union in the Plans which would reduce or diminish the benefits or privileges thereunder for the employees within the bargaining unit.”

By law, no change can be retroactively applied. A defined benefit Plan can only be changed on a ‘going-forward’ basis.

CenturyLink has 2 pension plans. The CenturyTel legacy Plan (which is now ‘frozen’) covering the non-represented CenturyLink employees and a second Plan which is compromised of the Pension assets of those units that CenturyLink has acquired that had pension plans. Those Plans are still in effect. Changing, eliminating or freezing those plans is a mandatory subject of bargaining.

Attached is a power point covering these topics as well as how the Qwest Pension Plan works. There is also information regarding retiree healthcare and how those Plans function.

There is not reason to run out the door based on a fear of what might happen. Particularly since there is no reason to believe that anything will change either now or in bargaining. Even if there were to be such changes made, those impacted would have enough notice to be able to exercise their options under the current Plans.

Lastly, not many of our members know of or understand the Pension Survivor benefit. Members need to initiate this process if they have an interest.